Keyword: multiple

S&P 500 Return: Earnings Growth vs. Multiple Expansion Multiple expansion explains the S&P 500’s impressive total return of 31.49% in 2019, despite muted earnings. Image: Strategas

S&P 500 Valuation Multiples The price-to-sales ratio of the S&P 500 Index suggests that stocks are as expensive as they were during the Internet bubble. The P/E ratio also remains at high level. Image: Tomasz Hońdo

MSCI ACWI and S&P 500 Forward P/E Multiple This year, the forward P/E multiple for global equities and for the S&P 500 increased by approximately 24%. Historically, multiples contract or remain flat following years of big multiple expansion. Image: Morgan Stanley Research

Multiple Expansion – Year-Over-Year Change in the S&P 500 Forward P/E Since the beginning of the year, the multiple expansion explains the S&P 500 return. Historically, S&P multiples contract or remain flat following years of big multiple expansion. Image: BofA Merrill Lynch US Equity & US Quant Strategy

Russell 2000 Trailing EV/EBITDA Multiples vs. Private Equity EBITDA Multiples This chart shows that private equity multiples are currently higher than public equity multiples. Image: Strategas

U.S. Equities and The World: Earnings Growth vs. Multiple Expansion Since the 2009 low, the strong performance of the U.S. markets comes from earnings growth (73%) and multiple expansion (27%). You may also like “S&P 500 Return: Earnings Growth vs. Multiple Expansion.” Image: Goldman Sachs Global Investment Research

S&P 500 Total Return Decomposition by Sector Financials is the only sector that has experienced multiple contraction for the past decade. Image: BofA US Equity & Quant Strategy

Percentage Contribution of Returns Between Dividends, Earnings and Valuation Since the beginning of the year, the multiple expansion explains the majority of returns in equities around the world. Image: Goldman Sachs Global Investment Research

Forward PE Ratio and Real 10-Year Treasury Rate Lower real 10-year Treasury rates suggest lower equity market multiples. Image: Morgan Stanley Research

U.S. Yield Curve and Growth/Value P/E Ratio The chart below shows that the shape of yield curve explains nearly 50% of the variation in value vs. growth multiples. Actually, when the U.S. economy is sluggish, investors prefer growth stocks. Image: BlackRock, Inc.